Azerbaijan, Russia seal major gas deal, more to come

3rd September 2010, Comments 0 comments

Azerbaijan will double gas exports to Russia in 2011 and increase them further from 2012, the countries said Friday in a move that could undercut Europe's drive to secure Central Asian supplies.

The agreement between Azerbaijan state energy company SOCAR and Russia's Gazprom was signed during Russian President Dmitry Medvedev's visit to Baku as both Moscow and the West vy for access to the energy-rich ex-Soviet state.

Medvedev and his host Azerbaijani President Ilham Aliyev praised growing economic ties and said the new accord was not directed at any rival project.

"There are different projects and we cannot and should not stand in the way of each other," Russian news agencies quoted Medvedev as saying at a news conference.

"Let those projects that are profitable win!" he was quoted as saying. "Russia and Azerbaijan are large players, resource suppliers and therefore we should agree and cooperate with each other."

Gazprom signed a deal with SOCAR to buy two billion cubic metres of gas in 2011, it said in a statement, adding that this amount will increase again from 2012.

An initial contract signed in October 2009 was doubled in December 2009 to one billion cubic meters.

"This means that Azerbaijan is giving priority to Russia, Gazprom when it comes to ramping up exports of its natural gas supplies," Gazprom chief executive Alexei Miller said in televised remarks.

He also said that Russia would like to secure even larger supplies for its planned pipeline known as South Stream, a rival to Europe's Nabucco gas project.

"The contract that has been signed is unique," Russian news agencies quoted Miller as saying. "It has no upper limit on the volume of gas purchases."

The agreement on increasing gas supplies may ultimately deprive the Nabucco pipeline of a portion of gas from Azerbaijan, analysts say.

The Nabucco project aims to deliver gas from the Caspian Sea region to Europe through Turkey starting in 2014 in order to ease European reliance on Russian supplies.

President Aliyev argued against what he called "the politicisation" of the two countries' economic cooperation.

"If all the interested parties treat this from the point of view of economic expediency, and politicisation is reduced to the minimum, then the interests of all the parties will be taken into account," he was quoted as saying.

Rich in oil and gas and strategically located between Russia and Iran, Azerbaijan has been courted by both Moscow and the West since gaining independence with the 1991 collapse of the Soviet Union.

Azerbaijan last year produced 23.6 billion cubic metres of natural gas, according to government figures, and it expects to nearly double that to 40 billion cubic metres by 2015-2020.

Medvedev travelled to Azerbaijan following his last month's trip to the country's arch-foe Armenia.

On the visit in Yerevan, Medvedev said Russia was committed to protecting Armenia's security and supplying the country with arms and military equipment, sparking worries in Baku.

Tensions remain high over Nagorny Karabakh, where ethnic Armenian separatists backed by Yerevan broke from Baku's control during a war in the 1990s that claimed an estimated 30,000 lives.

© 2010 AFP

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